The Financial Industry Regulatory Authority Inc. last week fined another broker-dealer, this time the wealth management aggregator Sanctuary Securities Inc., for negligent sales to clients of GPB Capital Holdings private placements in light of GPB’s failure in 2018 to issue audited financial statements for the high-risk, high-commission investments.
In the settlement, Sanctuary Securities, with 270 registered reps and financial advisers, accepted Finra’s findings without admission or denial. Last Friday, the firm was fined $60,000 and agreed to pay restitution of $48,000, plus interest, to the clients affected.
The Indianapolis-based firm was known as David A. Noyes & Co. until March 2020, when it changed its name to Sanctuary in connection with a change in management and control at the firm, according to Finra.
The actions outlined in the Finra settlement predate Sanctuary Wealth’s acquisition of David A. Noyes in 2018, a company spokesperson wrote in an email. “The David A. Noyes brand no longer exists and no former members of the executive team are current employees of Sanctuary Wealth. We are pleased to have resolved this prior matter.”
The actions covered in the settlement date back to June 2018; that’s when financial advisers and clients who had purchased GPB private placements were waiting for the company to file financial statements with the Securities and Exchange Commission for two of its largest funds, even though both funds had crossed industry thresholds for making such information public a year earlier.
After missing its deadline to file the audited financial statements, GPB struggled, cutting dividends on some of its private placements. Last year, its founder David Gentile and other senior executives were charged with fraud by the Justice Department.
In June 2018, David A. Noyes negligently failed to tell eight investors in two offerings related to GPB Capital Holdings that the issuers failed to timely make required filings with the Securities and Exchange Commission, including filing audited financial statements for the private placements, according to Finra.
GPB Capital, a New York-based alternative asset management firm founded in 2013, served as the general partner for limited partnerships formed to acquire income-producing companies such as auto dealerships and trash businesses. GPB eventually raised $1.8 billion from investors. GPB has been selling assets, but it has not yet released clear plans on how investors are to get back money from those transactions.
Meanwhile, Sanctuary Wealth said Friday that it had hired Mary Ann Bartels as chief investment strategist. According to the company, Bartels spent more than two decades at Bank of America Merrill Lynch, where she was head of technical and market analysis, and led the Research Investment Committee.
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